Case 2:06-cv-05578-SVW-JC Document 421 Filed 03/23/10 Page 1 of 15

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9

10 COLUMBIA PICTURES INDUSTRIES, ) CV 06-5578 SVW (JCx) 11 INC., et al., ) ) ORDER RE: PLAINTIFFS’ MOTION 12 Plaintiffs, ) FOR PERMANENT INJUNCTION [395] ) 13 v. ) ) 14 GARY FUNG, et al., ) ) 15 Defendants. ) ) 16 17 18 19 20 21 22 23 24 25

26 As stated at the March 22, 2010 hearing, the Court’s proposed 27 deletions and additions are contained herein. The parties’ responses 28 Case 2:06-cv-05578-SVW-JC Document 421 Filed 03/23/10 Page 2 of 15

1 to the Court’s alterations — and only the Court’s alterations — shall 2 be filed according to the following schedule: 3 -Defendants’ response of no more than eight pages: March 29, 2010; 4 -Plaintiffs’ reply of no more than eight pages: April 5, 2010; 5 -Defendants’ sur-reply of no more than five pages: April 12, 2010. 6 Upon receiving the parties’ briefing, the Court will issue such further 7 orders as are necessary. 8 The Court’s proposed additions are highlighted in UNDERLINED BOLD

9 and deletions in strike-through text. 10 /// 11 /// 12 /// 13 On December 21, 2009, the Court granted Plaintiffs’ Motion for 14 Summary Judgment on Liability, Docket # 391 (the “Order”), finding that 15 Defendants Gary Fung and Isohunt Web Technologies, Inc. (collectively, 16 “Defendants”) induced infringement of Plaintiffs’ copyrights in 17 violation of United States copyright law. See Metro-Goldwyn-Mayer 18 Studios, Inc. v. , 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 19 781 (2005). The Court found that “evidence of Defendants’ intent to 20 induce infringement is overwhelming and beyond reasonable dispute,” 21 Order at 25, and therefore that “Defendants’ inducement liability is 22 overwhelmingly clear,” id. at 15. On the issue of a permanent 23 injunction, the Court has considered the briefs filed by the parties 24 and the argument presented at the hearing on this matter. Based on the 25 foregoing and all matters of record in this action, pursuant to Federal 26 Rule of Civil Procedure 65 and 17 U.S.C. § 502, the Court enters a 27 28

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1 Permanent Injunction in favor of Plaintiffs and against Defendants in 2 accordance with the terms contained herein. 3 The Court concludes that a permanent injunction should issue to 4 restrain further infringement of Plaintiffs’ copyrights. Plaintiffs

5 have satisfied their burden under eBay Inc. v. MercExchange, L.L.C., 6 547 U.S. 388, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006), “(1) that 7 [they have] suffered an irreparable injury; (2) that remedies available 8 at law, such as monetary damages, are inadequate to compensate for that 9 injury; (3) that, considering the balance of hardships between the 10 plaintiff[s] and defendant[s], a remedy in equity is warranted; and (4) 11 that the public interest would not be disserved by a permanent 12 injunction.” Id. at 391. 13 Plaintiffs have demonstrated that they have suffered irreparable 14 harm, and would suffer further irreparable harm from Defendants’ 15 continued infringement, in three independent ways. First, given the 16 staggering volume of infringement of Plaintiffs’ copyrights, it is 17 extremely unlikely that Defendants will be able fully to compensate 18 Plaintiffs monetarily for the infringements Defendants have induced in 19 the past, or the infringements they could induce in the future. Metro- 20 Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1217 21 (C.D. Cal. 2007) (“Grokster V”). Second, given the way in which 22 Defendants’ system works, when Defendants’ end-users download one of 23 Plaintiffs’ works, the end-users automatically and simultaneously 24 further distribute the work to innumerable others as a required part of 25 the download process; additionally, at the conclusion of the download, 26 Defendants’ end-users obtain an unprotected digital copy of Plaintiffs’ 27 28

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1 work that those end-users can further distribute indefinitely at will.1 2 Thus, when Defendants induce infringement, “Plaintiffs’ copyrighted 3 works can be unstoppably and near-instantaneously infringed throughout 4 the computer-literate world with the files obtained by [Defendants’] 5 end-users. Plaintiffs’ power to control their rights has been so 6 compromised by the means through which [Defendants] encouraged end- 7 users to infringe (digital files plus the internet) that the inducement 8 amounts to irreparable harm.” Id. at 1218-19. Third, it is axiomatic 9 that the availability of free infringing copies of Plaintiffs’ works 10 through Defendants’ irreparably undermines the growing 11 legitimate market for consumers to purchase access to the same works. 12 E.g., Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 13 928-29, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) (“digital 14 distribution of copyrighted material threatens copyright holders as 15 never before, because every copy is identical to the original, copying 16 is easy, and many people (especially the young) use file-sharing 17 software to download copyrighted works”); A&M Records, Inc. v. , 18 Inc., 239 F.3d 1004, 1017 (9th Cir. 2001) (citing “Napster’s 19 deleterious effect on the present and future digital download market”). 20

21 1 The Court notes that Defendants argue that the Supreme Court’s holding in Grokster was limited solely to “devices” that induce 22 infringement. Defendants further argue that they are immune from an 23 injunction against their “activities.” (Opp. at 6-7, 19.) Defendants’ argument lacks merit. Nothing in Grokster requires that 24 there be a “device”; the central inquiry is based on the defendants’ “purposeful, culpable expression and conduct.” Grokster, 545 U.S. at 25 937. The Supreme Court’s holding in Grokster was not limited solely to “devices.” The Supreme Court used terms such as “device,” 26 “product,” and “tool” interchangeably. Id. at 940 n.13. In 27 addition, the clear import of the Supreme Court’s opinion was that a defendant may be secondarily liable for his conduct and activities 28 wholly separate and apart from any products, devices, or tools.

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1 For many of the same reasons, Plaintiffs have demonstrated that 2 they do not have an adequate remedy at law for the harm that has been 3 or could be caused by Defendants’ infringement. “‘Damages are no

4 remedy at all if they cannot be collected.’” Grokster V, 518 F. Supp. 5 2d at 1219 (quoting Douglas Laycock, The Death of the Irreparable 6 Injury Rule, 103 Harv. L. Rev. 687, 716 (1990)). Likewise, “[a] legal 7 remedy is inadequate if it would require a multiplicity of suits.” Id. 8 at 1220 (quoting Laycock, 103 Harv. L. Rev. at 714) (alteration in 9 original). Here, especially given the multiplicity of infringements of 10 Plaintiffs’ works caused by a single user downloading a single dot- 11 from Defendants’ sites, see Order at 6-7, it would be 12 untenable for Plaintiffs to track and proceed against each infringing 13 end-user. Additionally, Plaintiffs would not be able to recover 14 damages from Defendants for the inevitable derivative infringements 15 that would occur outside Defendants’ websites when copyrighted content 16 acquired as a result of Defendants’ inducement is further distributed 17 by Defendants’ users. These further infringements are a continuing 18 threat, making remedies at law insufficient to compensate for 19 Plaintiffs’ injuries. The only realistic method for remedying such 20 future harm from Defendants’ inducement is by way of a permanent 21 injunction. Grokster V, 518 F. Supp. 2d at 1220. 22 The balance of hardships between Defendants and Plaintiffs also 23 warrants the issuance of a permanent injunction. As described, absent 24 an injunction, Plaintiffs would suffer a severe hardship as a result of 25 Defendants’ inducement of infringement. The injunction being ordered 26 by the Court would not pose a corresponding hardship on Defendants. 27 The Court has already found that Defendants’ websites are used 28

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1 overwhelmingly for , with upwards of 95% of all 2 dot-torrent files downloaded from Defendants’ websites corresponding to 3 works that are infringing or at least highly likely to be infringing. 4 Liability Order at 10-11. Obviously, the harm to Defendants from no 5 longer being able to exploit and profit from that infringement is not a

6 hardship the Court need consider. See Cadence Design Sys., Inc. v. 7 Avant! Corp., 125 F.3d 824, 829 (9th Cir. 1997) (defendant “cannot 8 complain of the harm that will befall it when properly forced to desist 9 from its infringing activities” (citation and internal quotation marks 10 omitted)). Beyond that, the Court’s injunction is limited to 11 Plaintiffs’ copyrights and will not substantially interfere with any 12 claimed non-infringing aspects of Defendants’ system. 13 The Court is further persuaded that Defendants would likely 14 continue to induce infringement in the absence of a permanent 15 injunction. As this Court observed in Grokster: 16 [A] successful inducer will sometimes have no need to repeat the 17 infringing message ad infinitum. This is especially likely to be 18 the case where the product in question is overwhelmingly used for 19 infringing purposes, and requires little or no specialized 20 training to operate. At a certain point, the inducer can simply 21 continue to distribute the product without any additional active 22 encouragement, recognizing that the marketplace will respond in 23 turn. Thus, once the market has internalized the inducer’s 24 promotion of infringement, the resulting infringements should be 25 attributable to that defendant even though he/she no longer 26 chooses to actively promote that message. 27 Grokster V, 518 F. Supp. 2d at 1233-34. 28

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1 The Court finds those observations fully applicable to this case. 2 For years, Defendants operated their websites as popular destinations 3 for copyright infringement and etched their niche in the market for 4 infringement. Defendants were enormously successful in building a 5 user-base of infringers that, by Defendants’ own account, number in the

6 millions. See Order at 42. As stated, the evidence of Defendants’ 7 illegal objective was “overwhelming” and the resulting amount of 8 infringement of Plaintiffs’ copyrights has been staggering. 9 Defendants’ websites “remain[] inexorably linked to [Defendants’] 10 historical efforts to promote infringement.” Grokster V, 518 F. Supp. 11 2d at 1235. Absent an injunction directing Defendants to prevent 12 infringement of Plaintiffs’ works, it is highly likely that Defendants’ 13 existing users and new users would continue to use Defendants’ system 14 to infringe Plaintiffs’ copyrights. 15 Moreover, the Court’s conclusion that Defendants are likely to 16 continue to induce copyright infringement is warranted by (1) the great 17 extent to which Defendants have actively encouraged copyright 18 infringement in the past; (2) the fact that Defendants’ very business 19 model, at its core, depends upon copyright infringement, and Defendants 20 would financially benefit from further infringement; and (3) the fact 21 that, even since the Court’s Order finding Defendants liable for 22 inducing copyright infringement, Defendants have not taken steps to 23 mitigate the infringement of Plaintiffs’ works. Defendants’ proposed 24 “primal” or “lite” contains all of the same indexing and 25 searching functions as the original websites, only with a different

26 interface for the users to operate. (See Servodido Reply Decl., Ex. G, 27 at 15-21.) In fact, Defendants have not even ceased the actively 28

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1 inducing conduct that the Court expressly indicated in its Order 2 plainly encourages and promotes copyright infringement. Defendant Fung

3 has affirmatively stated that he will not take steps to prevent 4 infringement on his websites unless he is ordered to do so by this 5 Court. (Fung interview, quoted in Defs. Opp. at 3.) In short, 6 Defendants’ past and present statements and conduct establish that 7 Defendants “fully intend[] to continue [their] distribution of the” 8 tools that are central to their inducement of copyright infringement. 9 See Grokster V, 518 F. Supp. 2d at 1229-30. 10 Finally, the Court agrees that the public interest will be served 11 with a permanent injunction, since it will protect Plaintiffs’ 12 copyrights against increased and unrestrained infringement. Id. at 13 1222. Although Defendants argue that the BitTorrent “ecosystem” would 14 be harmed by the present injunction (Opp. at 15-17), this injunction is 15 aimed solely at Defendants’ unlawful use of BitTorrent and similar 16 technology, not at third parties’ lawful use of BitTorrent and similar 17 technology. 18 The Court thus finds that the four part eBay test favors the 19 imposition of a permanent injunction to restrain Defendants’ 20 infringement. In its discretion, the Court deems it appropriate for a 21 permanent injunction to issue. 22 [It will therefore be ordered, adjudged, and decreed that:] 23 1. For the purposes of this Permanent Injunction, the following 24 definitions shall apply: 25 (a) “Defendants” shall mean Gary Fung and Isohunt Web 26 Technologies, Inc., whether acting jointly or individually. 27 (b) “Isohunt System” shall mean the websites www.isohunt.com, 28

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1 www.podtropolis.com, www.torrentbox.com, and www.ed2k-it.com, and 2 shall further include any servers, trackers, software, and 3 electronic data that make up or support such websites. 4 (c) “Comparable System” shall mean any website, system or 5 software that provides users access to Plaintiffs’ Copyrighted 6 Works, using BitTorrent or any peer-to-peer or other file-sharing 7 or content delivery technology. 8 (d) “Copyrighted Works” shall mean each of those works, or 9 portions thereof, whether now in existence or later created, in 10 which any Plaintiff (or parent, subsidiary or affiliate of any 11 Plaintiff), at the time of Defendants’ conduct in question, owns 12 or controls a valid and subsisting exclusive right under the 13 United States Copyright Act, 17 U.S.C. §§ 101 et seq., and which 14 Plaintiffs have identified to Defendants by the title of the work. 15 (e) “Dot-torrent or similar files” shall mean dot-torrent files, 16 magnet links, hash links, or other functionally similar files, 17 links or identifiers. 18 (f) “Infringement-Related Terms” shall mean: 19 (i) terms that refer to the titles or commonly understood 20 names of Plaintiffs’ Copyrighted Works (for example, the 21 title or common name of a television series); 22 (ii) terms that signal the availability of Plaintiffs’ 23 Copyrighted Works (for example, “Television,” “Box Office 24 Movies,” “DVD Rips,” “,” “,” “Telecine,” 25 “” or “PPV”); or 26 (iii) terms that are widely associated with copyright 27 infringement (for example “,” “Axxo,” or “Jaybob”). 28

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1 2. Subject to the terms of Paragraph 5 below, Defendants shall be

2 permanently enjoined from knowingly engaging in any of the following 3 activities in connection with the Isohunt System or any Comparable 4 System: 5 (a) hosting, indexing, linking to, or otherwise providing access 6 to any Dot-torrent or similar files that correspond, point or lead 7 to any of the Copyrighted Works; 8 (b) assisting with end-user reproductions or transmissions of any 9 of the Copyrighted Works through a tracker server, or any other 10 server or software that assists users in locating, identifying or 11 obtaining files from other users offering any of the Copyrighted 12 Works for transmission; or 13 (c) hosting or providing access to any of the Copyrighted Works. 14 3. Defendants shall immediately and permanently be enjoined from 15 knowingly engaging in any activities having the object or effect of 16 fostering infringement of Plaintiffs’ Copyrighted Works, including 17 without limitation, by engaging in any of the following activities: 18 (a) advertising or promoting access to or the availability of 19 Plaintiffs’ Copyrighted Works; 20 (b) encouraging or soliciting users to reproduce or distribute 21 Plaintiffs’ Copyrighted Works; 22 (c) encouraging or soliciting users to upload, post or index any 23 Dot-torrent or similar files that correspond, point or lead to any 24 of the Copyrighted Works; 25 (d) encouraging or soliciting users to link to copies of 26 Plaintiffs’ Copyrighted Works; 27 (e) providing technical assistance or support services to users 28

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1 engaged in infringement of, or seeking to infringe, Plaintiffs’ 2 Copyrighted Works; 3 (f) creating, maintaining, highlighting or otherwise providing 4 access to lists of “top” downloads of, or search terms for, Dot- 5 torrent or similar files that include, refer to or signal the 6 availability of Plaintiffs’ Copyrighted Works; 7 (g) including Infringement-Related Terms in metadata for any 8 webpages; 9 (h) creating, maintaining or providing access to browsable 10 website categories of Dot-torrent or similar files using or based 11 on Infringement-Related Terms; 12 (i) organizing, harvesting or categorizing Dot-torrent or similar 13 files using or based on Infringement-Related Terms; 14 (j) soliciting or targeting a user base generally understood, in 15 substantial part, to be engaging in infringement of, or seeking to 16 infringe, Plaintiffs’ Copyrighted Works; 17 (k) transferring or redirecting users of the Isohunt System to 18 any other service that, directly or indirectly, provides access to 19 unauthorized copies of Plaintiffs’ Copyrighted Works; 20 (l) indexing or providing access to Dot-torrent or similar files 21 harvested or collected from well-known infringing source sites, 22 such as “”; 23 (m) soliciting revenue from third party advertisers or 24 advertising brokers based on (or by referring to or highlighting) 25 the availability of Plaintiff’s Copyrighted Works. 26 4. The terms of Paragraphs 2 and 3 of this Permanent Injunction shall 27 not apply to any Copyrighted Work for which Defendants have obtained 28

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1 express written authorization or license for the use being made of such 2 Copyrighted Work from each Plaintiff that owns or controls the rights 3 to such Copyrighted Work, provided such authorization or license is in 4 force and valid at the time of Defendants’ use of the Copyrighted Work. 5 5. Defendants shall not be in violation of this Permanent Injunction 6 as to Copyrighted Works that Plaintiffs, or representatives of 7 Plaintiffs, have not (a) identified to Defendants by title of the work, 8 and (b) represented to Defendants that, based on a reasonable review 9 and good faith belief, a Plaintiff (or a parent, subsidiary or 10 affiliate of a Plaintiff) owns or controls a valid and subsisting 11 exclusive right under the United States Copyright Act, 17 U.S.C. §§ 101 12 et seq. in the work (a “list of titles”). 13 (a) Plaintiffs shall be permitted to supplement and update their 14 list of titles without restriction, including without limitation 15 with works soon-to-be but not yet released to the public. 16 (b) Plaintiffs shall provide Defendants with the list of titles 17 in electronic form. 18 (c) Defendants shall promptly provide Plaintiffs with a valid 19 email address to use for the lists of titles, and Defendants shall 20 immediately notify Plaintiffs in writing of any change in such 21 email address. A list of titles shall be deemed delivered when 22 sent to the most current email provided by Defendants. 23 (d) With regard to the initial list of titles provided by 24 Plaintiffs pursuant to this Permanent Injunction, Defendants shall 25 be required to comply with the terms of Paragraph 2 above no later 26 than 14 calendar days from the date Plaintiffs deliver the initial 27 list of titles. 28

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1 (e) For all subsequent lists of titles, Defendants shall be 2 required to comply with the terms of Paragraph 2 above no later 3 than 24 hours from the time Plaintiffs deliver the list of titles. 4 (f) In the event a commercial vendor or other third party becomes 5 able to provide Defendants with a reliable list of Plaintiffs’ 6 Copyrighted Works, Plaintiffs may apply to the Court for an order 7 modifying this Permanent Injunction to relieve them of the 8 obligation of providing Defendants with lists of titles, even if 9 there is a cost to Defendants of securing the lists of titles from 10 the commercial vendor or third party. 11 6. Prior to Defendants entering into any agreement or transaction 12 whatsoever to sell, lease, license, assign, convey, give away, 13 distribute, loan, barter, hypothecate, encumber, pledge or otherwise 14 transfer, whether or not for consideration or compensation, any part of 15 the software, source code, data files, other technology, domain names, 16 trademarks, brands, or Dot-torrent or similar files used in connection 17 with the Isohunt System or any Comparable System (a “Transfer of 18 Isohunt-Related Assets”), Defendants shall require, as a condition of 19 any such transaction, that the transferee: 20 (a) submit to the Court’s jurisdiction and venue; 21 (b) agree to be bound by the terms herein; and 22 (c) apply to the Court for an order adding it as a party to this 23 Permanent Injunction. 24 Defendants shall not permit any Transfer of Isohunt-Related Assets to 25 close until the Court has entered such an order. Defendants further 26 shall not engage in a Transfer of Isohunt-Related Assets with or to any 27 person whom Defendants know to be engaged in, or intending to be 28

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1 engaged in, conduct that would violate the terms of Paragraphs 2 or 3 2 above. 3 7. This Permanent Injunction shall bind Gary Fung, individually, and 4 Isohunt Web Technologies, Inc., and their officers, agents, servants, 5 employees, attorneys, successors, and assigns, and all those in active 6 concert or participation with any of them, who receive actual notice of 7 this Permanent Injunction by personal service or otherwise. Defendants 8 shall provide a copy of this Permanent Injunction to each of their 9 respective officers, agents, servants, employees, attorneys, 10 principals, shareholders, current and future administrators or 11 moderators for the Isohunt System (or Comparable System) or any online 12 forums associated with the Isohunt System (or Comparable System), and 13 any domain name registries or registrars responsible for any domain 14 names used in connection with the Isohunt System (or Comparable 15 System). 16 8. Nothing in this Permanent Injunction shall limit the right of 17 Plaintiffs to seek to recover damages under 17 U.S.C. § 504, or costs, 18 including attorneys’ fees, under 17 U.S.C. § 505. 19 9. For purposes of clarity, as the Court has personal jurisdiction 20 over Defendants and has concluded that the conduct of Defendants 21 induces infringement of Plaintiffs’ Copyrighted Works in the United 22 States under the copyright laws of the United States, this Permanent 23 Injunction enjoins the conduct of Defendants wherever they may be 24 found, including without limitation in Canada. 25 10. The Court further clarifies that this injunction only covers acts 26 of infringement, as defined in 17 U.S.C. § 106, that take place in the 27 United States. To the extent that an act of reproducing, copying, 28

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1 distributing, performing, or displaying takes place in the United 2 States, it may violate 17 U.S.C. § 106, subject to the generally 3 applicable requirements and defenses of the Copyright Act. Further, as 4 explained in the Court’s December 23, 2009 Order, “United States 5 copyright law does not require that both parties be located in the 6 United States. Rather, the acts of uploading and downloading are each 7 independent grounds of copyright infringement liability.” Summary 8 Judgment Order at 19. 9 11. Violation of this Permanent Injunction shall expose the 10 Defendants, and all others properly bound by it, to all applicable 11 penalties, including for contempt of Court. 12 12. The Court shall maintain jurisdiction over this action for the 13 purposes of enforcing this Permanent Injunction. 14 15 16 IT IS SO ORDERED. 17

18 DATED: March 23, 2010 STEPHEN V. WILSON 19 UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28

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